Armed conflict characteristics and its effects on firm exit
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2012Author
Camacho, Adriana
Rodriguez, Catherine
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Abstract
This paper uses two unique panel data sets to study the causal effect
that different characteristics of the armed conflict have over firm exit
in Colombia. Using a fixed effects estimation methodology at the plant
level and controlling for the possible endogeneity of armed conflict
through the use of instrumental variables, we find that the particular
armed group that operates in a given region, the level of polarization
of the conflict as well as the specific target of the attack impact in a
differential manner the probability of firm exit. This poses important
implications for policy recommendations and actions in the different
regions of the country.